Double Fine founder Tim Schafer is heralded as one of our most treasured video game designers, but he hasn't actually led a project since 2009's Brütal Legend. Sure, the company has shipped four brand new titles since that time, but Schafer himself -- who made a name for himself as the creative lead of classics such as Full Throttle, Grim Fandango, Day of the Tentacle and Psychonauts -- has passed the lead designer torch to others in the studio.

Now Schafer has made his comeback as a lead designer, but not in a way many would have anticipated. Double Fine Happy Action Theater, released by Microsoft Wednesday on Xbox Live Arcade, is a Kinect-enabled piece of software aimed at children (and dorm rooms, as Schafer tells us) that doesn't bother with rules or mechanics. It doesn't have story, mechanics, or even rules to speak of: it's an augmented reality toy, the only "game" here is in the player's head.

Gamasutra caught up with Schafer recently for a lengthy discussion of where Happy Action Theater came from, where the Kinect is headed, and whether Double Fine could ever go back to being a developer of AAA retail games.

So let's talk about the... game? Are we even calling it a game?

Tim Schafer: [laughs] I call it a video toy. Or just toy. Because it really is just a freeform device that you play with. You make up how to play with it as you play with it.

You're the lead on this, right?

TS: Yeah. I haven't led a game since Brütal, and so I've been watching all these guys lead projects and helping them and being kind of relieved that I didn't have to worry about a project, but also kind of jealous because it's fun! Like, "When am I going to make a game again?"

Still, the needs of these little projects were still pretty high on me. Each project needs some writing, or some brainstorming, or some business need from me. So there's still a lot of time that goes into the little projects we do.

But a little idea like Double Fine Action Theater can fit right in. And it has no dialogue, so I don't have to lock myself in my office for an hour every day, which I do when I'm writing. So we can kind of come up with crazy ideas and play them and iterate on them, and it was really fun. And it was only like six months in production.

Where did it come from?

TS: We're making Kinect games, and I was playing a Kinect game at home... not one of ours. It was someone else's Kinect game. It's a good game, and it's meant for kids, probably like five and up. And I wanted to play -- because of the content of it -- I wanted to play it with my daughter, Lili, who was two and a half back then. It's a game that was out -- one of the launch titles on Kinect.

So we were trying to play it, and the content was so cute. She wanted to interact with it, but it was so hard to get her to stand in the right place and hold her hand on a dot for the Kinect timer to count down, and follow the instructions, all these crazy things that you have to do with new games. They're not crazy if you're five years old or older.

The Kinect is such a natural interface for games. There's such a low barrier to entry. But it's not low enough. There should be a way of dealing with the chaos of a little kid. They just want to run in, they want to run off, they want to go sit on the couch. They lay down, they stand up, they jump around, they grab your leg. And there should be a way that a game can tolerate that without having all the errors and freakouts that sometimes a Kinect game will have.

So I was starting to remember those little simple advertisements they would have in malls where kids would walk by a big screen and there would be leaves to blow around, or a projected screen was on the floor and they could jump on it and pop popcorn with their feet and stuff like that.

And I was thinking, what if you could turn those into high production value experiences, and then use some of the new cool tech and the depth field of Kinect and all that to create experiences that were more high tech and more high production value? Just like, something you could interact with and play with. And I just called up Microsoft with the idea, and we signed a game over the phone.

I guess you can do that if you're Tim Schafer.

TS: It's an involved process. But it was just such a small idea, and it really helped to have a target demographic that I actually knew, a specific person that I could make a game for and make it work for her.

So essentially you made a game for your daughter.

TS: Yeah. [Sesame Street:] Once Upon a Monster was also a game that I like to think of as a game for her. But I wanted to make a game that went even younger, you know? Once Upon a Monster is an actual game. It has an actual story, actual characters. Happy Action Theater is a collection of activities, like toys that you play with.

I thought if you just loosened up some of the restrictions that are on Kinect games, and stop thinking about them in the way that we normally think... We think of them in terms of these goals and objectives that can be demanding on the player, because the buttons on the controller are so accurate. You know when they press the A button, or turn the stick. But the Kinect, you're not entirely sure what they're doing, so the experiences have to be a lot more forgiving.

And I was like, "What if we just make them completely forgiving, and there's no failure?" So the game has no failure case, it has no real goals except for the goals you make up for yourself given the tools that we give you.